Prices are back at the $100 level
Crude prices ended higher for the week that ended on Friday, 22 February, 2008. Prices ended higher by $3(3.1%) near $99/barrel. Price ended twice more than $100/barrel during the week.
Initially during the week, prices rose after comments from Organization of Petroleum Exporting Countries (OPEC) officials hinted a production cut in the near term. But then, in the later part, prices fell after an Energy Department report showed that U.S. inventories rose almost twice as much as forecast in the last week, as refineries slowed processing to perform seasonal maintenance.
For the day ending Friday, 22 February, crude-oil futures for light sweet crude for February delivery closed at $98.81/barrel (higher by $0.58 or 0.56%) on the New York Mercantile Exchange for the day. Prices fell to $97.6 and rose to $100.01 during intra day trading. Earlier in February, prices had slipped to $87/barrel.
On Friday, 22 February, prices increased due to cold conditions prevailing in the North East of US. But market pared gains due to bleak economic condition of the country.
As per the weekly inventory report by EIA on Wednesday, crude inventories rose 4.2 million barrels in the week ended 15 February outstripping the increase of 3.2 million barrels that market expected. On the demand side, EIA reported motor gasoline demand has averaged 9.0 million barrels per day, or 0.5% above the same period last year. Distillate fuel demand has averaged 4.3 million barrels per day over the last four weeks, down 1.9% compared to the same period last year.
EIA also reported that Gasoline supplies rose by 1.1 million barrels in the latest week, while distillate stocks fell by 4.5 million barrels. Total petroleum inventories, including crude oil, gasoline, and diesel, decreased by 3.7 million barrels last week, but they are still in the upper half of the average range for this time of year.
Last weekend, Iranian oil minister said that reducing production is very normal for OPEC in March. Iran is OPEC’s second largest oil producer.
Prior to that, two ministers of OPEC hinted that the cartel might go for a production cut in its next meeting at March, 2008. At its 1 February meeting at Vienna, OPEC members decided to keep current output levels unchanged.
In a monthly report released earlier this month, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.